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For a block of shared code, to be used by several product areas, there appears to be two installer options:
What are the pros and cons of these choices?
Nested MSIs are a deprecated feature of MSI and should not be used.
Your choices are 1) merge module, or 2) MSI chaining, a.k.a. multi-package transactions.
MSI chaining is great in theory, but it requires MSI v4.5 or later, which is only native to Windows 7. (There are redistributables of v4.5 for older versions of Windows.)
All things considered, I think merge modules are the way to go.